S. Vasudevan, Executive Partner at Lakshmikumaran & Sridharan Attorneys, says, “The CBDT has introduced new Income tax forms (ITR) for AY 2024-25. While the forms applicable to different assessee remains the same, these forms have been updated to gather additional information to enhance transparency in the financial transactions and to incorporate the amendments brought out by the Finance Act, 2023.”
New ITR forms for Assessment Year 2024-25: The Income Tax Department recently announced that I-T return forms 2, 3, and 5 are now available for filing tax returns for the assessment year 2024-25. The ITR-1, which is filed by individuals with a total income of up to Rs 50 lakh, and the ITR-6 for businesses were previously notified in December 2023 and January 2024, respectively.
The statement said, “The Central Board of Direct Taxes (CBDT) dated January 31, 2024, has notified Income-tax Return Forms (ITR Form)- 2, 3 and 5 for the Assessment Year (AY) 2024-25.”
All ITR Forms 1 to 6 have since been notified and will come into effect from April 1, 2024, it added.
“Changes have been incorporated in the ITRs in order to facilitate the taxpayers and to improve ease of filing,” the CBDT added.
Read More: Income Tax 2024: What are the changes notified in new ITR forms?
ITR forms for Assessment Year 2024-25: Which form to choose?
ITR-2: Individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession [and are not eligible to file ITR Form-1 (Sahaj)] can file ITR-2
ITR-3: Those who do have income from business or profession can file ITR Form 3.
ITR-4: Sugam is for resident individuals, HUFs, and firms (other than LLPs) with a total income of up to Rs 50 lakh and income from business or profession.
ITR-5: Partnership firms and LLPs can file ITR Form-5.
ITR-6: Companies other than those exempt under Section 11 can file ITR Form-6.
Read More: Key income tax changes in Budget
New ITR forms for Assessment Year 2024-25: What do the experts say?
Experts say that although additional information will now be required, but there have been some welcome changes as well. S. Vasudevan, Executive Partner at Lakshmikumaran & Sridharan Attorneys, says, “The CBDT has introduced new Income tax forms (ITR) for AY 2024-25. While the forms applicable to different assessee remains the same, these forms have been updated to gather additional information to enhance transparency in the financial transactions and to incorporate the amendments brought out by the Finance Act, 2023.”
“A welcome change has been made for Individuals and HUF liable to tax audit under Section 44AB, in enabling them to verify the return using EVC. While these changes may require additional information to be entered by the Assessee, these may be necessary, seen from the perspective of enhanced transparency in the tax administration,” Vasudevan adds.
Talking about the changes in particular, the Executive Partner at Lakshmikumaran & Sridharan Attorneys, informs, “The new forms have been structured to make the new tax regime under Section 115BAC as the default provision applicable. The taxpayer who wishes to opt for the old regime has to indicate the choice in ITR. Taxpayers filing ITR -3 will be required to file Form 10-IEA to opt out of Section 115BAC. ITR 3,4 and 5 now contains a new line which requires ‘receipts in cash’ to be disclosed by assessee carrying on business or profession.”
“In line with amendment in Finance Act, 2023, necessary changes have been brought in ITR forms to disclose the sum payable to Micro or Small enterprises beyond the specified time limit as per the MSME Act,2006. Further, changes have also been incorporated in the forms in ‘Schedule -OS’ for taxpayers to provide the income received from winnings from online games, dividend income from IFSC, Business trust and bonus payments under life insurance policies. Disclosure relating to capital gains is also amended requiring Assessee to furnish date of deposit, account number and IFSC code in addition to the sum deposited under Capital Gains Accounts Scheme,” he adds.
Mahesh Krishnamoorthy, Managing Director, Core Integra, spells out the most significant changes, saying, “The new ITR-1 to ITR-6 notified by CBDT for AY 2024-25 comes into effect from April 01, 2024. From the individual’s perspective, it is important to know the change, one of the most significant being for individuals where new ITR-1 requires to specify new or old tax regime where new tax regime has become the default option unless opted out specifically.”
Krishnamoorthy believes it will eventually ease the tax-paying process, saying, “Overall, the new forms simplify the tax return filing process with additional columns for specific information pertaining to individuals in ITR-1 and ITR-4. For salaried individuals who do not have any other major source of income, the new ITR-1 will simplify the return filing process. The new forms will also enable Income Tax to process refunds in a shorter timeline.”
New ITR forms for Assessment Year 2024-25: Expert’s take on new tax regime becoming default
Sonali Chowdhry, CEO of Officenet, explains the changes in detail for the taxpayer in the context of the new tax regime becoming the default tax regime while filing returns —
The Pros:
– The new tax regime makes sense for this with income up to Rs 7 lakh, or for those with higher incomes who cannot claim tax benefits of at least Rs 4.5 lakh.
– Tax calculation under new tax regime is simpler.
– Operating under the new tax regime makes life simpler for the taxpayer as they do not have to worry about keeping records of their exemption claims.
The Cons:
– Those who claim high amount of exemptions are better off in old tax regime
– New tax regime makes no effort to incentivise taxpayers to save, such as in ELSS or PPF schemes.
Benefit for taxpayers:
The new regime provides lower tax rates and a simpler structure but has fewer exemptions and limited tax planning opportunities. Individuals should carefully assess their income, deductions, and tax liabilities to determine which regime is more beneficial for them.
“The new income tax regime is designed to accommodate those who prefer minimal deductions or wish to avoid the burden of extensive tax preparation. This includes non-salaried taxpayers, such as consultants, who are not eligible for Section VIA exemptions and deductions. Additionally, older individuals who do not receive a pension from their employment, thus rendering them ineligible for the Rs 50,000 standard deduction, may also find the new regime more suitable. Conversely, senior citizens, who derive a substantial portion of their income from interest, can benefit from the newly introduced Section 80TTB, which allows them to claim Rs.50,000 as interest income deduction. Therefore, they may feel more secure under the old tax regime,” Sonali sums up saying.
